Lagos to Mombasa: What Can Climate-Resistant Infrastructure Do for Africa?

GYUDE MOORE:
You're listening to Lagos to Mombasa, the Trans Africa podcast from the center for global development and I'm your host, Gyude Moore. This season of Lagos to Mombasa has focused on the climate and its impact on lives and livelihoods. No continent is more vulnerable, no continent is more exposed to the negative effects of climate change, than the African continent. But beyond the great exposure on the continent, is the even greater issue of resilience. The African continent doesn't have the resources to be able to respond to the increasingly difficult impact of climate. So this episode of Lagos to Mombasa is to focus on infrastructure, the intersection of climate change, climate adaptation and infrastructure. We are very pleased to have a guest who is one of the most knowledgeable and best positioned to discuss this topic. We're here with Mr. Antonio Pedro, he's the deputy executive secretary at the United Nations Economic Commission for Africa, UNECA. Welcome, Pedro.

ANTONIO PEDRO:
Thank you very much, Gyude. So It's a pleasure, and I look forward to our conversation.

GYUDE MOORE:
When I was Minister of Works in Liberia, I was responsible for building and maintaining infrastructure across the country. And Liberia is in the tropics, it rains really, really heavily in the rainy season, and then in the dry season it's very dry. More than 50% of the roads in the country are not paved. We did a structural analysis of the road network and found that 49% of the country's population didn't have access to all weather roads, and a lot of countries in sub-Saharan Africa have the same issues. More than 50% of the roads across the continent are unpaved, but at least 90% of freight and passenger movement on the continent occurs on roads. So when these roads wash out, when these roads are disrupted because of heavy rains, it has significant impact on the economy. But roads are not the only infrastructure here. There is a number that we talk about all the time, about 600 million Africans lacking access to electricity. It means that Africa cannot move up the value chain of its exports, and so there is no complexity to Africa's export basket, but that's not the only thing.

During the crisis that happened in the Red sea with the Houthis firing missiles are ships passing African ports did not benefit at all from the new traffic, simply because there haven't been significant investment in African ports to accommodate new volumes. And so, it's not simply the absence of infrastructure, is that the infrastructure that we do have is under threat from the climate. And so, because of the high cost to the economy, to health, to life, to access the social services, it is important for us to have this conversation about climate resilient infrastructure. So, Pedro, for someone who's listening to this and they hear us talk about climate resilient infrastructure, what does that even mean?

ANTONIO PEDRO:
So, climate resilient infrastructure is one that can withstand the impacts of climate change and provide continuity in the delivery of relevant infrastructure services. And I think the key words here are indeed, resilience, continuity, and the ability to withstand the shocks. It's about knowing where to build, and how to build, so that in extreme climate conditions, that infrastructure can continue to provide infrastructure services, which are key for livelihoods, which are key for development, as you've quite rightly introduced when you're making reference to Liberia. Which is a situation, as you've indicated, that applies in most of our countries on the continent. So, it is existential, and it is important, therefore, that our member states make the right choices on where to place that infrastructure and how to build it, so that it can continue to help our member states in achieving their development goals as enshrined in the SDGs and agenda 2063.

GYUDE MOORE:
Infrastructure tends to be large ticket items. It tends to be very, capital intensive. And so even if the infrastructure isn't using climate resilient methods, it's very expensive on its own. Improving infrastructure to be climate resilient means that we're using, higher quality materials or more of the same materials making that very expensive. What do you say to people who say that the cost of building climate resilient infrastructure is too prohibitive?

ANTONIO PEDRO:
On average, climate change impacts are costing our economies about 5% of GDP per year. And in the worst case scenarios, this can go up to much more than that. A couple of cyclones or a couple of years ago in southern Africa, in my country I come from Mozambique, but 15% of GDP was wiped out, because of climate change. And, with countries that are facing still the impacts of Covid 19, it becomes therefore an impossible proposition to continue with business as usual. UNDP studies have indicated that countries divert between 2 and 9% of their budgets into addressing the impacts of extreme weather events. Meaning, it's important to provide evidence based analysis to our member states. And that's what institutions like ours, the Economic Commission for Africa do. Which is to enable our member States to understand what the tradeoffs are, what are the costs of inaction, and then act accordingly.

GYUDE MOORE:
You know they have this saying, "If you think education is expensive, try ignorance". Are there any examples of places where people are actually beginning to address this question in Africa?

ANTONIO PEDRO:
Yes. In Zimbabwe and Zambia, after the impacts of climate change, especially El. Nino and La. Nina events in 2015, hydropower production in their most important dam, the Kariba Dam, fell by almost 12% also. And immediately, those countries recognised that they had to strengthen their energy security, by diversifying their sources of electricity. And we were very pleased that during Cop27 in Egypt, we witnessed the signature of an agreement between Zimbabwe and the Canadian company, to start the production of solar driven electricity production in Zimbabwe, about 500MW. This is happening in many other countries. The importance of securing electricity or energy security through diversifying the sources of energy. In addition, more investments are being made into ensuring that roads take into consideration the impacts of climate change. Utilizing GIS enabled data to understand where better to locate those roads, which is important. Utilizing climate data to understand historical patterns that would perhaps provide the basis to plan better.

Climate change is having severe impacts on agriculture, including those that are driven by shifts in agro ecological zones. Meaning that, if for example you are building your irrigation infrastructure in a place that because of climate change, would not be able to be your breadbasket, it means that, that is a wasted investment. One needs therefore, to utilize all of those data sets, with a view to determine where better to locate that infrastructure and how to build it.(INAUDIBLE) And this applies to energy, to water, to roads, ports and agriculture infrastructure, irrigation and so forth.

GYUDE MOORE:
This is really important. Recently in Kenya, there were these floods, and these floods disrupted life, these floods destroyed property. And one of the things that became clear was that there were large parts of Kenya where there was no infrastructure to evacuate flood waters. So, the SIM canals we built for irrigation, can be used to divert flood waters and prevent or reduce the impact of flooding on lives and protect croplands. So I'm glad that we're expanding this conversation when it comes to resilient infrastructure to something that's beyond roads, beyond the obvious things that we think about when we think of infrastructure. One of the things that we wanted to do, was to anchor our conversation in this 2023 Africa sustainable development Report. How would you describe the report and its conclusions? What is this report? What did you find? What does it say?

ANTONIO PEDRO:
The 2023 Africa Sustain Development Report, whose title is 'Accelerating the Recovery from the Coronavirus Disease', and full implementation of the 2030 agenda for Sustain Development and the African Union agenda 2063 at all levels, recognised among other things, that in general we are off track in most SDGs. I think the latest account suggests that we are about 70% in most targets. For example on target 9.1, which talks to the object of our conversation today, which is to develop quality, reliable, sustainable and resilient infrastructure, including regional and transboundary infrastructure, to support economic development and human wellbeing, with a focus on affordable and equitable access for all. I think this target, you would agree with me, we are off track. 600 million people don't have access to electricity. So with the Covid 19, we had more people falling into poverty, and multidimensional poverty for that matter. And that is important, because it's not only about having infrastructure, it's about ensuring that, that infrastructure is accessible to the majority of our people so that we do not leave anyone behind.

GYUDE MOORE:
That is correct.

ANTONIO PEDRO:
So, Covid 19 has deepened the number of people. 50 or so million people have entered the poverty line, and today Africa is the continent with the largest number of poor people, close to 600 million people. But at the same time, in the report, we've recognised that there are huge opportunities for the continent to rescue the SDGs. And in particular, on the matters of energy, and because of where we started from, we have huge opportunities to become a global powerhouse for climate action and investments, in line with all of the imperatives of reaching net zero targets. Because we have some of the highest irradiation potential in the world, 60% or so, we have equally very good wind energy potential in addition to the hydroelectric potential, the Inga, which if we go to Inga four and develop it, we could have up to 50,000 or so megawatts of clean energy that could, link 15 countries or so, in southern Africa and beyond to access to energy.

GYUDE MOORE:
Despite all of the advantages you talk about, you know, a significant portion of investment in green energy is not happening in Africa. If we are going to use GIS enabled feasibility studies for infrastructure, where do we put infrastructure? How? It also means that the quality of the materials we use in infrastructure will have to be different, probably slightly more expensive. And so we have to have this question about, you know, how does one finance this transition to green energy? Does the report say anything at all about the financing of green energy?

ANTONIO PEDRO:
Yes, absolutely. I mean, as you've quite rightly indicated, we are not capturing a fair share of investments in renewable energy. Less than 5% for a continent that has the highest potential as I've indicated earlier, including, in critical minerals, which are key for the energy transitions. 70% of cobalt is produced in DRC, between South Africa and Gabon, we have 90% or so of manganese, and the list goes on. And yet we are not attracting the investments that are required. We need to increase the pipeline of bankable projects, and that applies to other infrastructure projects, Kida, the programme for infrastructure development in Africa that the African Union spearheaded, is an important framework for us to be able to attract more investments into the infrastructure sector and energy included. So, the bankability of our projects depend on a couple of factors, some associated with the perceptions. I think we, as the United Nations Economic Commission for Africa, are working on that front, to ensure that whatever assessments of the risk profile of the continent are based on clear data, and not on assumptions which are not driven by evidence.

Because that raises the cost of borrowing, and the cost of investing on the continent. So, we need to address that, working together with the international community.

GYUDE MOORE:
One of the issues, you know, on SDG nine is this question of innovation. And fostering innovation is one of the pillars that the report covers. But that remains a challenge when it comes to research and development in Africa. And in some instances, it may not even be a priority for policymakers, you know, in high income countries, according to the report, up to 3.6% of GDP is spent on research and development of new technologies, but there isn't a lot of research or data on how much is being spent. And the one African country for which there is some sort of data, Egypt was spending less than 1% on R&D. So, on the question of innovation, where are we? How are we doing? How can we be better?

ANTONIO PEDRO:
Well, you've painted a very real picture. We are not prioritizing investments in science technology innovation. And yet, that is the foundation on which we can use our comparative advantages, as those I've referred to earlier when I was talking about potential into competitive advantages. And this applies to developing countries as well as to middle income countries. We have a couple on the continent which, if they don't center stage science technology and innovation into their development policies and actions, then they will be trapped in the so-called middle income trap. So, it is critical for us to address this bottleneck. As you know, 2025 has been declared as the year of education by the African Union Commission in the latest summit held here in Addis Ababa in February. The importance of science technology innovation and the stems in general was recognised and some member states action on that front. For example, Rwanda has an innovation endowment fund that enables innovators at every scale to access funding to take some of their inventions into final products.

And that's important because there is no difference whatsoever in terms of the ability of our continent to be able to innovate. Our young people are in the forefront of major innovations, and many large corporations are setting base in Africa. I mean, from the googles of this world to Microsoft because they recognize the potential. However, we need to put science technology innovation and industrial policy for that matter, at the center of our development. And this is something that does not require money. It is really about political will, it's about having a little bit more rationality in our development agendas and action, and sending the right signals so that the factor flows go to where the opportunities are. By utilizing smart policies, our member states can indeed make our continent a better investment destination. By utilizing smart incentives, they can change the pattern, they can incentivize investments in renewable energy, for example, enabling many more players to enter into this space.

GYUDE MOORE:
This question keeps coming up again and again, and we discuss this climate issue is about the quality of governance, how governments are organized to deliver. Right now, China provides significant amount of scholarships for Africans to study their higher education, France does the same thing, Australia does it. And so if countries organized, and had a plan of how to build resilience, how to build capacity in these sectors, they could also use existing tools, existing partnerships and scholarship schemes. But to your point, governance and how incentives are structured, how policymaking is done will allow us to do this. The final thing I wanted us to just at least talk a little bit about is that, since the 1960s, the primary driver of African economies have been some form of extraction. Extracting minerals, extracting forest products, extracting agricultural products. But you mentioned that export basket has been very simple, and not diverse and largely dominated by unprocessed exports.

And, we're now in this new age of a transition to net zero, and a significant number of the critical minerals required to enable that transition are being mined in Africa. And yet, Africa continues to capture very little of the value that is extracted from this. So when we think about building infrastructure, when we think about building resilient infrastructure, how can we tie that to African countries moving up the value chain of existing exports? I'm not saying anything new, just moving up the value chain of existing exports. One of the examples that I like to use is, we use a significant amount of energy to process ores. So there should be a captive off taker for investment in energy if we are adding value to our mineral exports on the continent. So from the perspective of UNECA, from the perspective of the report, how can we link the two? Building resilient infrastructure and moving African countries up the value chain of their current exports.

ANTONIO PEDRO:
That's a great question and really talks to one school of thought and practice that we are starting to invest more here at ECA, which is on sustainability transitions. Which really tries to put forward a framework that brings all of these issues together by recognizing among other things, the interlinkages. Where we start by advocating for beyond resource extractivism in Africa, which indeed, as you've quite rightly indicated, has locked most of our countries in the bottom end of global value chains as exporters of raw materials. Now, in the path to net zero, we have unique comparative advantages in the battery and electric vehicle value chain, to localize the industry on the continent. Because our emissions profile is better, we've commissioned together with the African Development Bank, Afrexim bank, Africa Finance Corporation Bhadeya, and the African Legal Support Facility. A study to BloombergNEF, which indicated that, the production of battery precursors, so the chemicals that go into the batteries in DRC, was three times cheaper than the production similar quantity in China and the US, and two times cheaper than Poland, and that the emissions profile was 25% better because of course, as you indicated, we don't need to transport all of these minerals all the way to China.

So the fundamentals are there. Now, what is it that is missing, is indeed the infrastructure. And this is where now, we are looking at regional value chains and target 9.1 on SDG nine talks about these issues, about looking at the regional and transboundary infrastructure. So, in what we are working together with our partners as well as the governments of DRC and Zambia, we have looked at locations that could benefit from the cheaper access to the raw materials with less emissions profile. And of course, the copper belt that stands between DRC and Zambia is the ideal location for this transboundary special economic zone. But for you to be able to go up to the production of electric vehicles in particular, we need inputs from the rest of the continent. Earlier, I made reference to manganese from South Africa and Gabon. We will need nickel from Madagascar and other places, and we need graphite from from Mozambique. So, we are looking at continent wide regional value chain, that will enable the continent to have access to this market of $60 trillion by 2050.

And compare that with the current GDP of a country like DRC, which is about 50 to $60 billion a year. So this is a typical case of the paradox of plenty, where you produce 70% of your cobalt, other countries which are far from that resource base, are benefiting much more than your country. Companies like Tesla, for example, with a market valuation of $1.3 trillion in 2021, cannot exist without such critical minerals. So this is what is at stake. This is where we need to bring infrastructure together with the opportunity. We are also working on other factors that can boost that competitiveness of the continent. Our work in the development of carbon credit markets, which will enable us to make money from our forests without having to cut them, by mainstreaming natural capital accounting in national accounts. In other words, recognizing the value of our natural capital as an asset class in itself without necessarily having to extract it in the form of timber, or other resources. That's the principle of the sustainability transitions conversations that we have started.

It's about maximizing the co-benefits to ensure that local communities will be the agents that will protect the forests or the mangroves or any other natural asset, because they are benefiting significantly from those assets through the revenues that are accrued, for example, through carbon credit markets.

GYUDE MOORE:
Thank you so much for joining us this morning. Really appreciate your insight and sharing your time with us.

ANTONIO PEDRO:
Thank you very much. Always a pleasure.

GYUDE MOORE:
Thanks for listening to Lagos to Mombasa. The Trans Africa podcast from the center for Global Development. Very special thanks to our podcast team. I cannot thank Kia Muleta enough. I don't even know how I would do this without her. Stephanie Donohoe, the Soundeazy team, our production team. They've been amazing and incredible. Thanks for making this happen. Lagos to Mombasa is available on the CGD podcast stream, so make sure you're subscribed to the CGD Podcast on Apple, Spotify or wherever you listen to podcasts. And remember, you can check out all of our research and more at CGDev.org. That's CGDev.org. See you next time for our last episode of Lagos to Mombasa. Have a great day.